Senior accountant ‘disputes’ findings of NIB’s $ 10.8 million loan


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A prominent Bahamian accountant yesterday said he “completely disagreed” with a forensic audit report finding that he and his company “neglected their obligations” on a $ 10.8 million government mortgage. of dollars.

Philip Galanis, the director of HLB Galanis & Company, told Tribune Business that the company was “absolutely in compliance with the due diligence that we had to do” as administrator of the $ 10.8 million facility put forward by the National Insurance Board (NIB) at the Department of Housing. and the Environment.

He fired back after a forensic investigation by accounting firm BDO (see other article on page 1B) suggested that up to $ 1.119 million in “improper payments” to Bahamian contractors for work construction of houses that were never carried out “could have been avoided” if HLB Galanis had “carried out its work in a thorough and professional manner”.

Of that amount, BDO said $ 300,693 was for “unauthorized mobilization advance payments” for contractors, while an additional $ 417,249 was paid for construction work that never got done.

Of the latter figure, some $ 269,690 of these “inappropriate payments” went to contractors in Abaco, while the balance of $ 147,559 went to Grand Bahama. The report also identified $ 118,025 in “duplicate payments” made to contractors, while $ 283,264 was defrauded by an employee of the accounting firm HLB Galanis & Co who subsequently entered into a “plea bargaining agreement” in court.

BDO produced a graph allegedly showing that Mr. Galanis and his company were in full compliance with only one of their 19 obligations, namely opening a bank account. The company was selected for the administrator role because it was the lowest bidder at $ 25,000, although it ultimately received an approved budget of $ 124,700.

“The administrator performed little or no due diligence and otherwise neglected his obligations under his agreement,” said the BDO report, completed in January 2020 and tabled in the House of Assembly yesterday.

“We learned from our discussions with Mr. Philip Galanis of HLB Galanis & Company, that when processing contractors’ payments for the program, the administrator only verified the contractor requests received from the Department of Housing and Environment contained an approval from the (ministry).

“So the admin made payments to contractors without reviewing contracts, payment schedules, or change order files. We also learned from our discussion that the administrator had not received a list of personnel authorized to approve the contractor’s work or copies of their signatures, ”he continued.

“The inappropriate payments identified in this report could have been avoided if the administrator had carried out his work in a thorough and professional manner. ”

The BDO report also accused HLB Galanis & Company of “ignoring its contractual obligations” to provide monthly reports on the financial position on the use of loan proceeds and the progress of construction to all parties – in particular NIB.

HLB Galanis & Company’s first report, for the period May 1, 2014 to August 31, was dated September 11, 2014. The following reports have been published quarterly and provided only to the Department of Housing and Environment. NIB only informed the administrator that he had received a report in 18 months on March 6, 2016.

Mr Galanis, while claiming that he had not yet received a copy of BDO’s report, denied allegations that his company did not perform due diligence on contractors’ payments.

Noting that he was not in the construction industry, he added that HLB Galanis & Company relied on the Department of Housing and Environment to inspect the housing works, verifying that they were properly completed and approve necessary payments.

“The due diligence that we had to do, we absolutely complied with that,” the former PLP and senator told Tribune Business. “This involved making sure that the contractor receiving the payment was approved by the ministry, that his business license had been verified by the ministry before we made any payments to him and that the actual amounts matched what the ministry told us. had advised.

“We have received the change orders and payment amounts from the ministry. I would never say that we never did due diligence. We are not a contractor or quantity surveyor, so we didn’t know if the job was done and relied on the ministry. I do not understand this comment at all.

As for the failure to comply with the monthly reporting obligation to the NIB, Mr Galanis said the criticisms were “fair enough”. However, he said his company worked for the Ministry of Housing and Environment, not the NIB, and did not report to the latter.

And while the contract required monthly reports, he added that it was indeed a waste in times when no activity was taking place. Some nine reports were provided over the life of the project, said Mr. Galanis.

Acknowledging that there had been “some gaps” in the way his company’s role was structured, he added: “I totally dispute that we did not do due diligence or fail to report. to the people who hired us. “

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